Commentary on the economic , geopolitical and simply fascinating things going on. Served occasionally with a side of snark.
Saturday, May 24, 2014
Ukraine Presidential Election Preview May 24 - 2014 -- While Putin plays it cool ( He will respect vote but where is Russia's money ) , Maidan looms large over vote and what comes next ......... Election preview ( Deutsche Bank via Zero Hedge ) ............ Not waiting for vote results, Yatsenyuk says new president to visit Brussels first - Itar Tass ....... Vote disruption fears are looming as the nation observes day of silence - Kiev Post ..... Did a Neoliberal Energy Grab Backfire? Crimea: an EU-US-Exxon Screwup
Tensions high on eve of Ukraine's vote
Pro-Russian voters in the east smash up ballot boxes, calling Sunday's presidential elections illegal.
Last updated: 24 May 2014 07:47
Amid final preparations for Ukraine's presidential elections, some voters in the east of the country say they will not recognise the vote. They have destroyed ballot boxes, claiming that eastern regions should not be part of the election because they have declared independence from Ukraine.
Al Jazeera's Jacky Rowland reports from Kiev.
On Sunday, most of Ukraine will go to the polls to elect a new president, and while much of the official focus is on eastern protesters, whose regions will largely not be participating in the vote anyhow, the Maidan protesters who violently ousted the last elected president three months ago are casting a much bigger shadow.
Three months after chasing President Yanukovych out of the country, many of the protesters are still there, and are demanding “radical actions” from whoever wins Sunday’s vote to secure their loyalty.
The Kiev protesters, many of them from the nation’s far West, include a strong collection of ultra-nationalists, who see crushing the autonomy protests that have erupted in the nation’s far east as job one for the new administration.
That’s almost certain to be Petro Poroshenko, the so-called Chocolate King, who is polling far ahead of competitors and may even get the 50 percent needed to avoid a run-off vote in June.
Many in Maidan aren’t too happy with Poroshenko, a former foreign minister seen by them as another “insider” and perhaps more damning, another oligarch. Despite polling strongly, he will have an uphill battle in convincing the Maidan crowd that he is the change they believe they signed up for.
Speaking at a business conference in St. Petersburg, Putin expressed hope that the next elected government would work with them on stabilization of the region, after several months of unrest.
Putin was also particularly critical of the US policy toward Ukraine, saying they had backed what amounted to a coup d’etat against the last elected government, and were now threatening sanctions unless Russia, in effect, “cleaned up the mess they created.”
Putin said his hope was to see calm return to their border with Ukraine, and that their goal was a negotiated settlement in the eastern portion of the country, where ethnic Russians have been calling for increased autonomy.
The Complete Ukraine Election Preview (In 1 Simple Chart)
With relative front-runner Yulia Tymoshenko suggesting Ukraine hold a referendum on joinng NATO in June - exactly the event that Putin has expressed grave concern about - this weekend's elections in the troubled nation are considerably more crucial to global geopolitical anxiety than the record low levels of implied volatility across FX, bond, and stock markets would suggest. AS Deutsche explains, Ukraine's new president will face challenges in almost all key spheres – in particular, de-escalating tensions within Ukraine, especially in the eastern provinces; conducting deep economic reforms in order to move Ukraine on the path of recovery along with dealing with the international lenders; finally, improving relations with Russia and the European Union. Below we outline the policy agendas of the candidates and assess the probable scenarios of further political development.
Via Deutsche Bank,
Ukraine: preview of 25 May presidential elections
The early presidential elections in Ukraine are scheduled for 25 May. The candidate becomes president in the first round of elections if he/she obtains a simple majority of votes. There is no requirement for a minimum turnout. If there is no clear winner in the first round, there will be a second round run-off between the two leading candidates, which is likely to take place in June.
According to the schedule of Ukraine’s Central Electoral Committee, the official results should be published not later than 4 June. The new president will face challenges in almost all key spheres – in particular, de-escalating tensions within Ukraine, especially in the eastern provinces; conducting deep economic reforms in order to move Ukraine on the path of recovery along with dealing with the international lenders; finally, improving relations with Russia and the European Union. Below we outline the policy agendas of the candidates and assess the probable scenarios of further political development.
According to the most recent polls in Ukraine (conducted by KIIS on 29 April - 11 May, see Figure 1 and Figure 3), out of 23 candidates Petro Poroshenko remains the most popular candidate in the presidential race (33.7% of total: 53.0% of votes in western regions, 41.4% in central regions, 25.3% in southern regions and 10.5% in eastern regions) followed by Yulia Tymoshenko (5.9%: 7.9%, 8.6%, 4.8%, 1.2% in the respective regions) and Sergei Tigipko (4.1%: 1.1%, 2.4%, 8.1%, 5.6% in the respective regions), while the remaining candidates have significantly lower support margins. The share of those who do not intend to participate in elections varies significantly across regions: 3.6% in western regions, 6.5% in central regions, 13.4% in southern regions and 32.2% in eastern regions.
Despite the economic and civil turmoil, in particular, in the eastern regions of the country, the results of other polls conducted recently suggest a broadly similar level of support for the main candidate; however, the variance of results for Tymoshenko and Tyhypko is quite high ranging from 6-17% and 4-9%, respectively (see Figure 1). The share of those, who did not decide yet, ranges from 10-20%, which increases the probability of largely unexpected outcomes to take place in the first round.
The importance of the presidential elections on 25 May is magnified by the defacto conditionality advanced by the West vis-à-vis Russia in which attempts to undermine these elections would be met with an escalation of sanctions.Accordingly, apart from the electoral outcomes per se, the key issue is Russia’s response to the results of Ukraine’s elections. The outcomes and the degree of Russia’s recognition of the election results in Ukraine will be based on who makes it into the second round, what the turnout is going to be, especially in eastern Ukraine as well as the scale of hostilities in eastern Ukraine in the run-up and during the elections.
In this regard, our base-case scenario is that Russia will tacitly accept the results of the elections (de facto but likely not de jure) in case the turnout is broadly in line with rates of participation observed in the previous presidential elections.Earlier this week, Ukraine’s Minister of Interior Arsen Avakov declared that the conduct of presidential elections will be difficult to control in a very significant part of the territory in eastern Ukraine, most likely referring to the regions of Luhansk and Donetsk. At the same time, he noted that some of the localities in these two regions may participate in the electoral vote.
In terms of the candidates, we see the following scenarios as per the recent KIIS (29 Apr - 11 May) poll results:
Poroshenko and Tymoshenko in the second round (most likely): in this case the second round will not feature any pro-eastern candidates, which may lead Russia towards a harder line on the results of the elections.
Poroshenko and pro-eastern Tyhypko in the second round (least likely): this may change the dynamic of the elections in the second round with some potential for more active participation from the voters in the east.
Another factor that may impact Russia’s reaction to the presidential elections is the scale of hostility in eastern Ukraine. Depending on this factor, as well as the rate of participation (they are to some degree interrelated), we see the following scenarios:
Base case (65% probability):de facto, not de jure recognition – hostilities moderate towards the start of elections, rate of participation is relatively high in eastern Ukraine.
Optimistic scenario: de jure and de facto recognition (15%) in case of a significant de-escalation of military tension, progress in engaging the eastern representatives of pro-Russian forces in the peace process, relatively high rate of participation.
KIEV, May 24 (Itar-Tass) - Ukrainian parliament-appointed Premier Arseny Yatsenyuk, not waiting for results of the presidential elections, said that the new president would pay the first visit to Brussels.
"We will surely have a legally-elected president who will pay his first visit to the capital of united Europe and sign the document on the zone of free trade with the European Union," the government's press service quoted Yatsenyuk as saying.
The parliament-appointed premier also beforehand said the forthcoming elections would be "fair and transparent". "It will be expression of will of Ukraine’s west, east, north and south, a fair and unobstructed choice," he said.
At the same time, he did not give promises in public to suspend the continuing so-called "antiterrorist" operation in the east of the country at least on the vote day.
Fears that landmark voting for a president in Ukraine’s eastern regions will be severely disrupted abound, as the nation with great unease observes its electoral day of silence.
According to Ukrainian election law all the agitation and political advertisement should be stopped at midnight the day before presidential elections and all the agitation material should be taken down by utility workers over night.
However it’s not the electoral rule breakers that worry Ukrainians the most prior to the election date, but rather armed pro-Russian groups. Experts fear that the representatives of so-called Donbas People’s Republic are keen to ensure that Ukrainians in the country’s East won’t be able to vote.
According to Opora, national election watchdog, while the preparation for the election goes well in 95 percent of country’s polling stations, the vote is in danger at 50 percent of election districts in Luhansk and Donetsk oblasts. “The reasons are terrorist attack and personal threats to local election commission members, intimidations, kidnapping of local election commission members and destruction of documents,” Opora report reads. “As a result election commissions cannot fulfill their duties and their members rotate all the time.”
The majority of local election commissions are working undercover and often relocate, Opora observers say.
According to the election observers the risks of vote breakdown are high at 14 out 22 polling districts at Donetsk oblast, seven election districts are having problems with the preparation of vote but “the attempts to stabilize the situation are being made,” the report reads.
Election commission's offices were seized in Artemivsk, Horlivka, Konstantynivka, Makiivka, Shahtarsk, Starobeshevo, Telmanovo, Amrosievka, Mariupol and Donetsk. All the election documents were stolen in most of these towns.
Nonetheless Ukrainian government ensures everything possible is being done to ensure safety on Election Day. Ukrainian Deputy Interior Minister Mykola Velychkovych told on May 23 that over 80, 000 police officers, National Guard, state Service of Emergency Situation officers, senior year cadets and public activists will guard 32, 000 polling stations all over Ukraine on May 25.
Ukrainian Prime Minister Arseniy Yatseniuk ensured people in the east “who cannot go to the polls because of the war waged against Ukraine: terror committed by bandits in your land will end soon," he said in his video address to the nation on May 24 and emphasized - votes won’t be stolen this time. “This is the expression of the will of Ukrainians in the west, the east, the north and the south, this will be a fair and unhindered choice," he said.
On 17 May, William Broad’s piece, “In Taking Crimea, Putin Gains a Sea of Fuel Reserves”, appeared in the New York Times. Broad explained how the annexation of Crimea by Russia changed the legal claims for exclusive access to the maritime resources for the littoral nations of the Black Sea and the Sea of Azov. At the core of the change is the 200 NM exclusion zone promulgated by the Law of the Sea, 1982. Typically for the Grey Lady, Broad spun this fact into an anti-Putin tapestry using a charged mix of verbs, adjectives, and adverbs. Nevertheless, Broad’s report contains tantalizing information that hints at a fascinating alternative explanation for the events leading up to the Crimean annexation.
The facts in Broad’s report appear to come almost entirely from an interview Broad had with Dr. William B. F. Ryan, a marine geologist at the Lamont-Doherty Earth Observatory of Columbia University, including the maps showing each littoral country’s Law of the Sea exclusion zones. Ryan’s facts are not in dispute.
A point not mentioned by Broad is that no geographic location in either the Black Sea or the Sea of Azov is more than 200 NM from a coastline of the six littoral nations — Russia, Ukraine, Romania, Bulgaria, Turkey, or Georgia. This can be seen by superimposing the 200 NM scale on the map below (Figure 1). The overlap of all the “exclusion” zones covers 100% of both seas, with the six areas divvied up according to the separation rules codified by the Law the Sea. The extensive overlap means that the change in the Ukraine-Russian border produces a profound shift in the exclusion zones belonging to Russia and Ukraine, as shown in Dr. Ryan’s before and after maps (Figure 2 below).
The division of exclusion zones in the Black Sea is a big deal, because many geologists believe the floor of the Black Sea, like that of the North Sea, contains massive reserves of oil and gas, especially in deep water. We have added the 600 foot depth contour in red on Figure 1. This contour marks the beginning of the medium blue transition zone between the shallow coastal shelf waters and the deep sea waters outlined by the 6000 feet contour enclosing the deep blue area in Figure 1. (note: the contour lines in Figure 1 are in fathoms; 1 fathom = 6 feet.) With the exception of the northwestern portion of the Black Sea, coastal waters with depths of less than 600 feet cover only small distances from the national coastlines.
Now let’s turn our attention to the exclusion zones. The Ryan maps in Figure 2 break up the Black Sea and Sea of Azov into the six exclusion zones introduced above. They show how Russia’s annexation of Crimea did not change anything for Romania, Bulgaria, Turkey, or Georgia.
According to Ryan’s maps, the annexation of Crimea added 36,000 square miles, more than doubling Russia’s legal claims from 26,000 square miles in the Black Sea and Sea of Azov to 62,000 square miles. Ukraine lost a corresponding amount. More importantly, the overlay of the 600 foot contour shows that Ukraine no longer has access to any deep water. This change is a verifiable consequence of annexation.
And it has profound implications. Dr. Ryan also speculates the deep regions gained by Russia may be “the best” of the Black Sea’s deep oil reserves, although it must be remembered these reserves are not fully explored. In fact, as of 2012, less than 100 exploratory wells have been drilled in the Black Sea’s deep water, and only one well has struck pay dirt. That well, “Domino 1,” drilled in Romanian waters at a depth of 3200 feet, lies beyond the 600 foot contour line near the NE edge of the Romanian exclusion zone, close to what is now the Russian exclusion zone.
So, at first glance, it is easy to accept the picture slyly suggested by Broad’s charged verbs, adverbs, and adjectives: the annexation of Crimea by Russia was, at least in part, an aggressive energy grab by the Machiavellian Russian chess master, “Vlad the Bad” Putin. Such a conclusion is certainly comforting to those in the US neoliberal establishment intent on starting a new cold war and grabbing control of even more state property of the former USSR via privatization, austerity economics, and good old fashioned bribery.
But putting aside the tendentious verbiage, there are facts in Broad’s reportage that suggest quite a different picture. Note Broad’s several references to Exxon’s involvement and investment in Ukraine during 2012. Does this not raise the possibility that the US and EU-inspired putsch in Ukraine may have been allied with the lust of western oil and gas multinationals for a stranglehold on European energy supplies? If so, the figures compiled by Dr. Ryan may show how that coup blew up in our face.
To fully savor the possible dimensions of a US-EU-Exxon screw-up, let’s look at a chronology of the recent, none-too-subtle moves on the EU-Ukraine-Russian chessboard.
The EU started openly pushing Ukraine for a really raw, exploitative trade deal in March 2012. A month later, in April 2012, Putin signed up with ENI-Italy to explore Russian Black Sea oil/gas. In August 2012 Exxon put up big bucks to outbid Russia’s Lukoil for exploring Ukrainian Black Sea oil/gas (a deal crucial to Exxon’s breaking of Russia’s stranglehold on gas supplies for Europe). Over the next year, Yanukovych (no doubt convinced by massive contributions to his Bahamian bank accounts) pushed the Ukrainian parliament to pass all the laws required to meet the EU/IMF’s draconian austerity requirements. (see Michael Hudson’s “New Cold War Ukraine Gambit” for an explanation of neoliberal looting economics.)When it looked like he might succeed, Putin quickly imposed the gas/trade embargo on Ukraine in August 2013, starting a precipitous drop in the Ukrainian economy–and Yanukovych started backing away from the EU deal.
That’s when the EU-US-EXXON made their monumentally stupid move of unleashing the coup against Yanukovych, beginning with the November 2013 Maidan protests leading to the neo-fascist incited riots that ended in the coup of 27 February 2014. The US-EU inspired coup, of course, gave Putin the perfect opening to welcome the grateful Crimeans back into the Russian fold–thereby swelling Putin’s domestic approval ratings enough to keep him in power for the next ten years. (For a good analysis of how Putin may view the world, see Mark Ames’ analysis of how he is exploiting the politics of resentment in Russia, Nixon-style.) And, perhaps not coincidentally, welcoming the grateful Crimeans also happened to more than double Putin’s Black Sea oil/gas holdings, while ruining Exxon’s chances for breaking his stranglehold on European gas supplies.
Putin certainly isn’t the greatest European strategist since Bismarck. But it doesn’t take much to win when opposed by dumb, ultra-greedy opponents guided by the arrogance of ignorance. All Putin needed was seeing one tiny move further ahead.
The only thing dumber than the transparent US-EU-Exxon moves was the American and European media’s slavish coverage of the same.